IslamicFinance.de

The International Islamic Financial Market (IIFM) expects to finalise capital market related “Sukuk Al Ijarah” standard suite of documentation later this year. The Perpetual Tier 1 and Senior Unsecured Sukuk Al Mudarabah standard suite of documentation is currently ongoing and is expected to be completed by the end of the third quarter of 2019. The standard-setting body also started translation work on its standards and is expected to come out with French versions by early 2020 to cater for French language jurisdictions. It is also looking to develop training material for its standards in collaboration with consultants and training institutes to offer technically oriented workshops to the users.

The World Gold Council (WGC) and the International Islamic Financial Market (IIFM) plan to develop a series of standard templates for sharia-compliant gold contracts. Gold had traditionally been classified as a currency in Islamic finance, but new guidance has opened the door for a wider range of products. The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) developed a sharia standard for gold in 2016. The proposed contract templates from IIFM would add to those efforts by standardising the operational aspects of gold transactions. Natalie Dempster, managing director of central banks at the WGC, said the new standards would include physical allocation of gold, confirmation of ownership and spot transactions. Allocated gold agreements, consignment agreements, swap product confirmations and other gold-based products were also discussed at the consultation meeting, which was hosted by Borsa Istanbul, Turkey.

The main precondition for Islamic trade finance to increase its presence in Islamic finance is a closer co-operation between banks and businesses. Experts say Islamic trade finance needs to be developed with instruments that allow better control of risks related to trade partners or countries. The Bahrain-based International Islamic Financial Market (IIFM) started a cooperation with the Washington-based Bankers Association for Finance and Trade to create an industry standard, a so-called master risk participation agreement. This standard is expected to create transparent market practices and contribute to an increase of the trade finance business on a Shariah-compliant basis. Bank Negara Malaysia is also pushing for Islamic trade financing to support 10% of the country’s total trade up to 2020. The bank is currently consulting initiatives which could include blockchain-based trade finance solutions, e-commerce and providing trade credit takaful to mitigate trade risks.

The Bankers Association for Finance and Trade (Baft) and International Islamic Financial Market (IIFM) are creating an industry standard for buying and selling Islamic trade-related risk. The two parties have announced they have signed a memorandum of understanding to create a so-called master risk participation agreement. The industry already has such a standard, which was introduced 10 years ago and became the industry benchmark for such trade finance transactions. Baft president Tod Burwell said the association aims to repeat that success in the Islamic trade finance space, where standardisation is much needed. The Islamic risk participation agreement will incorporate considerations for funded and unfunded risk participations in trade assets within a Sharia-compliant framework. IIFM chairman Khalid Hamad said the cooperation with Baft would contribute to increasing the trade finance business on a Sharia-compliant basis.

According to a new report by the International Islamic Financial Market (IIFM), sukuk sales are set to continue to rise this year as issuers refinance debt and sovereigns continue to tap the Sharia-compliant fixed income markets. Maturing global sukuk, with a ticket size of US$100 million and with a tenor of more than a year, will stand at around $66bn during this year and 2018. About 86% of the $367bn outstanding sukuk are held by a small group of countries, including Malaysia, Saudi Arabia, the UAE and Indonesia.Other countries, like Turkey and Pakistan are forecast to boost their market share in the next few years. IIFM’s prediction of greater sukuk issuances is in line with forecasts from S&P Global Ratings. The rating agency expects sukuk sales this year to range between $75bn and $80bn, higher than its previous estimate of $60bn to $65bn. This year’s sales will be exceptional and are unlikely to be repeated next year, the agency said.

The International Islamic Financial Market (IIFM) and the International Swaps and Derivatives Association (ISDA) today published two new standards for Islamic forward foreign exchange products for use in Islamic hedging transactions. The Islamic Foreign Exchange Forward (IFX Forward) is intended to help minimize the exposure of Islamic financial institutions to foreign exchange volatility. The new standard does not require the usage of the balance sheet for both counterparties in Foreign Exchange Forward hedging transactions.

International Islamic Financial Market (IIFM) found that the year 2015 saw a major drop in issuances when only $60.6bn of sukuk were issued, a 43%-slump compared to 2014. A large part of the decline in sukuk issuance was due to the policy decision of Malaysia’s central bank to discontinue the issuance of short-term investment sukuk. Lower sovereign spending in leading Islamic finance jurisdictions continues to take its toll, issuances are not likely to recover in 2016.

The asset-backed sukuk is set to be reality soon largely due to the efforts of the International Islamic Financial Market (IIFM) to develop a master agreement on this new form of Islamic bonds.
All concerned parties have been consulted to prepare a master agreement paving the way for a shift from the asset-based to asset-backed sukuk, or Islamic bond structure.
Besides the founding members, IIFM is supported by its permanent members, namely State Bank of Pakistan and Dubai International Financial Center Authority.

The Central Bank of Bahrain (CBB) had a meeting with the International Islamic Financial Market (IIFM) Shariah Advisory Panel and selected IIFM member banks active in Islamic hedging/risk mitigation segment of the Islamic finance industry.
The purpose of the meeting was to have deliberation between Shariah scholars and market practitioners on Islamic hedging products which are essential for risk mitigation of real assets and real economic activity.
The meeting was attended by honorable scholars including Shaikh Dr. Ali Muhyealdin A. Al Quradaghi, Shaikh Nizam Yaquby, Shaikh Esam Ishaq, Shaikh Dr. Muhamad Akram Laldin, Shaikh Dr. Eltegani Abdelgadir and Shaikh Dr. Mohammed Burhan Arbouna.